Ahead of Market: 12 things that will decide stock action on Wednesday

MUMBAI: Nifty50 on Tuesday formed a bearish candle on the daily chart, even as late buying helped it recoup some of its losses suffered earlier in the day. However, analysts indicated that volatility is likely to reign supreme ahead of the expiry of the September derivative series on Thursday.

Here’s how analysts read the market pulse:

Gaurav Ratnaparkhi of Sharekhan said the index witnessed stiff resistance near its daily upper Bollinger Band for the third consecutive session. “The daily upper Bollinger Band, which has become flat, is likely to maintain pressure on the higher side. The daily momentum indicator has formed a bearish hook, suggesting weakness in the short term,” he said.

Mazhar Mohammad of Chartviewindia.in said that today’s intraday low of 17,576 levels index almost tested the lower boundary of its 26-day old ascending channel along with 13-day simple moving average. “Despite this bounce strength shall not be expected unless Nifty50 gets past 17,950 levels on a closing basis,” he said.

That said, here’s a look at what some of the key indicators are suggesting for Tuesday’s action:

Rising bond yields weigh on Wall St

Wall Street indexes sharply dropped on Tuesday as weak consumer confidence data deepened concerns over slowing U.S. economic growth, with the Nasdaq down more than 2 per cent as a surge in Treasury yields pressured mega-cap technology stocks. At 10:38 a.m. ET, the Dow Jones Industrial Average was down 361.68 points, or 1.04 per cent, at 34,507.69, the S&P 500 was down 64.66 points, or 1.46 per cent, at 4,378.45, and the Nasdaq Composite was down 321.51 points, or 2.15 per cent, at 14,648.46.

European stock tumble

Surging yields pressured high-growth technology shares at the start of trading in Europe while fresh signs of a slowdown in China’s economy also weighed on investor sentiment. The pan-European STOXX 600 index lost 1.61 per cent.

Tech View: Support seen at 17,800

The Nifty50 index ended over 106 points lower for the day and analysts suggested that the index has multiple support at 17,600 points level. They advised traders to be cautious with their short-term trading positions.

F&O: Out-of-money put writing a concern

Traders today heavily bought the 17,500 and 17,200 strike price put options of the Nifty50 suggesting that they see more weakness ahead. Further, the 17,800 and 17,900 strike price call options saw selling pressure, which indicates that the levels could act as resistance on Wednesday.

Stocks showing bullish bias

Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of Canara Bank, Confidence Petroleum, Bharat Electronics, Hindustan Oil Exploration, MMTC and BSE. The MACD is known for signalling trend reversals in traded securities or indices. When the MACD crosses above the signal line, it gives a bullish signal, indicating that the price of the security may see an upward movement and vice versa.

Stocks signalling weakness ahead

The MACD showed bearish signs on the counters of Bharti Airtel, HCL Technologies, Infosys, Firstsource Solutions, MindTree, Mphasis, Escorts, InterGlobe Aviation, Asian Paints, MSTC, Fineotex Chemical, FIlatex India, and Coforge. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms

IRCTC (Rs 2465 crore), RIL (Rs 2114 crore), Bharti Airtel (Rs 1533 crore), Bajaj Finance (Rs 1192 crore), Infosys (Rs 1107 crore), HCL Tech (Rs 1087 crore), Tata Steel (Rs 1038 crore), HDFC Bank (Rs 1025 crore), Maruti Suzuki (Rs 1001 crore) and ICICI Bank (Rs 969 crore) were among the most active stocks on Dalal Street in value terms. Higher activity on a counter in value terms can help identify the counters with highest trading turnovers in the day.

Most active stocks in volume terms

Vodafone Idea (Shares traded: 31.9 crore), BHEL (Shares traded: 11.7 crore), YES Bank (Shares traded: 11.5 crore), IDBI Bank (Shares traded: 8.95 crore), PNB (Shares traded: 8.7 crore), Trident (Shares traded: 5.8 crore), ONGC (Shares traded: 4.6 crore), Coal India (Shares traded: 4.2 crore), NTPC (Shares traded: 3.6 crore) and IDFC First Bank (Shares traded: 3.6 crore) were among the most traded stocks in the session.

Stocks seeing buying interest

IDBI Bank, Finolex Industries, Oil India, Cera Sanitaryware and PFC witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signaling bullish sentiment.

Stocks seeing selling pressure

CarTrade Tech, Metalyst Forgings, Krsnaa Diagnostics and Marine Electricals witnessed strong selling pressure and hit their 52-week lows, signaling bearish sentiment on these counters.

Sentiment meter favours bears

Overall, the market breadth remained in favour of the bears. As many as 180 stocks on the BSE500 index settled the day in the green, while 320 settled the day in the red.

Podcast: What triggered selling in the market?
Nifty50 ended up below 17,750 ahead of September series F&O expiry later this week. Sensex, which was down about 1,000 points intraday, ended up losing only 410 points, thanks to recovery in Reliance Industries and a few other stocks. Airtel, Tech Mahindra, Bajaj Finance and Bajaj Finserv were among stocks shedding 3-4 per cent market value. What exactly triggered the selling pressure in the market today?

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